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United States President George W. Bush, in a press conference this morning, announced that the federal government will provide $17.4 billion in short-term, low interest loans to the General Motors and Chrysler in exchange for wage concessions at all levels - management, unions and suppliers - and an ultimatum that the companies must have thorough plans in place by March 31 or the loans will have to be repaid and the automakers will be forced into a controlled chapter 11 bankruptcy.

Bush said that the two automakers will not be forced into chapter 11 bankruptcy unless they are unable to turn around their companies by March 31. He said that allowing the automakers to fail would be an “unacceptably painful blow” for the country.

The loans, in the president’s word, are “similar to those offered by Congress last week,” except that they require “meaningful concessions” for all levels, including the unions. Bush said that worker compensation must be comparable to those paid by foreign automakers operating on United States soil, thus delivering a potentially crippling blow to the United Auto Workers.

Bush said that the $17.4 billion will come out of the $700 billion financial rescue package known as TARP passed by Congress for use on Wall Street earlier this year. The first $13.4 billion will be made available immediately and the remaining $4 billion will come from the remaining $350 billion in the TARP fund.

“[The automakers have] three months to put in place plans to structure viable companies - which we believe they can do,” President Bush said. He stressed his reluctancy to have to provide the loans, but said that they were necessary given the current financial turmoil.

President Bush issued the ultimatum that the federal loans must be repaid by March 31 if the automakers do not come up with a viable plan for going forward, “or the only option will be bankruptcy.”

“[The automakers must] show the world once again they can meet challenges with ingenuity,” Bush concluded.

Prediction:
-GM & Chrysler Exec's get a $1.4 million Christmas bonus
-Fly whole company to Bermuda for "morale building"
-Complains to congress on March 29th that the global economy will collapse if they don't get another 24 billion

Why should their suppliers workers have their wages cut? That is bulldung. Bush, you are telling ME that because I own a business and supply parts, already as cheap as I can possibly go, you feel I need to cut my wages - and provide proof, to help them out. The parts I sell are marked up over 1000% by GM and Ford.

"must have thorough plans in place by March 31 or the loans will have to be repaid and the automakers will be forced into a controlled chapter 11 bankruptcy."

They're operating in the red, so they will not be able to pay back 17.4 billion in 3 months... Even foreign automakers are not posting these kinds of gains. Why not just save 17.4billion and set up that controlled ch. 11 now instead of stringing them out for a while until they file for it at the end of March?

And I really wish people would stop comparing our financial predicament to the great depression. It's really a low blow to people who had to live through the great depression in the working class. It's getting pretty safe to say that basically nobody on this forum is old enough to have been of working age during the 1930's so I don't really think many of us have a concept of just how bad it was for some people back then.

That's probably the only positive thing I see in this. I mean I don't have a problem with somebody working hard and making a living out of it, but modern labor unions take job security to a level that is just way too high and they're literally chasing jobs out of the country in many manufacturing industries.

Why should their suppliers workers have their wages cut? That is bulldung. Bush, you are telling ME that because I own a business and supply parts, already as cheap as I can possibly go, you feel I need to cut my wages - and provide proof, to help them out. The parts I sell are marked up over 1000% by GM and Ford.

F.U.

12345 How is that even enforceable? The suppliers are not part of the loan deal.

Well, I'll give Bush credit for at least making a decision rather than put his head in the sand and letting advisers make cryptic comments.

I agree, it's really sad when Congress basically did just that

" Oh ...this is such a mess! .... oh well.... time for my vacation K thnx bye"
---
I'm not thrilled by the idea of giving them free cash, but having more than 2 million people out of work & that number is swelling fast, really takes away much choice on the matter.

this quote catches my eye:

Quote:

the companies must have thorough plans in place by March 31 or the loans will have to be repaid and the automakers will be forced into a controlled chapter 11 bankruptcy.

So, does that mean that if GM & Chrysler have a "plan" & that somebody (who this is, I don't know) believes it, they don't have to worry about repaying which would = an automatic bankruptcy?

"must have thorough plans in place by March 31 or the loans will have to be repaid and the automakers will be forced into a controlled chapter 11 bankruptcy."

They're operating in the red, so they will not be able to pay back 17.4 billion in 3 months... Even foreign automakers are not posting these kinds of gains. Why not just save 17.4billion and set up that controlled ch. 11 now instead of stringing them out for a while until they file for it at the end of March?

It was my understanding that they must prove that they have a viable plan by March. If not, they have to repay the loans. So basically, here's a loan to get yourself on your feet. If you can't do it, pay it back (aka: go into bankruptcy).

People don't want hand-outs. They want to keep their jobs and want to keep working. Giving out LOANS (not "Free money") to keep these companies going - especially at a time of severe economic distress - is the only answer.

Everyone is so short-sighted these days it's scary
... building cars has historically been a very profitable business.

Because GM and Chrysler's management have screwed things up for quite some time now does not negate that fact. If need be, replace each and every executive at these companies and start from there, but simply letting them go under is not the way to go. And bankruptcy is not the answer either because that would force every one of their suppliers (who are already hurting quite bad) to go under too, along with hundreds of thousands of jobs... domino effect.

People don't want hand-outs. They want to keep their jobs and want to keep working. Giving out LOANS (not "Free money") to keep these companies going - especially at a time of severe economic distress - is the only answer.

Everyone is so short-sighted these days it's scary
... building cars has historically been a very profitable business.

Because GM and Chrysler's management have screwed things up for quite some time now does not negate that fact. If need be, replace each and every executive at these companies and start from there, but simply letting them go under is not the way to go. And bankruptcy is not the answer either because that would force every one of their suppliers (who are already hurting quite bad) to go under too, along with hundreds of thousands of jobs... domino effect.

I know your heart in is the right place here, but we have to be realistic. Currently GM and Chrysler do not sell enough cars to warrant having so many employees. They NEED to have some layoffs, that's inevitable. People need to face the facts that they will be losing their jobs soon. GM cannot and should not employ them just because its the right thing to do.

Allowing them to go into some kind of controlled bankruptcy does not equal bread lines for 2 million people. GM is too big to just vanish. What it needs is to trim the fat. Get rid of the dead weight. IF that means a lay off of 20% of the work force, then thats what it takes.

The loan is a token amount that literally is just throwing money away. It will do nothing in the long run unless the entire company changes vastly, from the dealer networks, to the manufacturing lines, etc. That is impossible in 3 months.

A company as top heavy as GM is, combined with the unions, is like telling a fat guy to run uphill with an anchor tied to his waist...

What happens after march 21st? They bring forth a plan to get them out of trouble, now what... do they get 50 billion more to enact the plan, then 100 billion more to rescue subcontractors, then 75 billion more to renovate factories...

It has to come to a head eventually, the airlines have all gone through a bankruptcy or two and they managed to come back leaner and more efficient. GM needs a good enema

You don't understand that in bankruptcy, the people that are owed money by GM will receive pennies on the dollar... GM's suppliers can NOT survive like that. They are already in a huge bind as it is. It's not just the bankruptcy of GM... that would cause all these other supplies to follow suit. If those suppliers go, then other automakers will be greatly effected also. Again, domino effect.

Oh yea, and no one is expecting for GM to keep all it's employees - but laying off XX,XXX number of people to keep X,XXX,XXX employed is what it's gonna take.

You don't understand that in bankruptcy, the people that are owed money by GM will receive pennies on the dollar... GM's suppliers can NOT survive like that. They are already in a huge bind as it is. It's not just the bankruptcy of GM... that would cause all these other supplies to follow suit. If those suppliers go, then other automakers will be greatly effected also. Again, domino effect.

Oh yea, and no one is expecting for GM to keep all it's employees - but laying off XX,XXX number of people to keep X,XXX,XXX employed is what it's gonna take.

You are right about the suppliers being the ones who will be the most effective, but I don't think it will equal out. If this money keeps GM running till March, then maybe it only helps the suppliers till the end of January and then they are back to where they were. I wish there was a real auto industry bail out where the suppliers were given the money and the manufacturers went into a controlled bankruptcy. Problem is it would take too much time/intelligence for the government to manage that. Regardless, I think they will be slashing jobs and divisions right away.